Public Statements

The Coming Effects of the Affordable Care Act

Floor Speech

Mr. BURGESS. Mr. Speaker, I thank the House leadership for allowing me to utilize this hour to talk about some of the coming effects of the Affordable Care Act.

THE BOSTON TRAGEDY

Mr. BURGESS. First, I do want to take a moment and join with so many of my colleagues who have just spoken on the floor in acknowledging the sacrifices that were made by first responders, people who ran toward the sound of the destruction this afternoon in Boston; and I certainly would recognize that even now, at this late hour, doctors and nurses are working in the emergency rooms in Boston to try to provide comfort to the afflicted and save life and limb for those who were damaged this afternoon, an act so astonishing in its cruelty, it is difficult to comprehend.

Mr. Speaker, in 5 1/2 short months from right now, October 1, 2013, the full effects of the Patient Protection and Affordable Care Act are going to start to be felt around the country. It's important that we take a few moments this evening and think about the road ahead, think about the things that are supposed to come online on October 1, and think about the contingencies if those things are not able to be accomplished.

It was just a few weeks ago in this town when speaking to the American Health Insurance group, one of the information technologists from Health and Human Services talked about this informational hub that is supposed to be developed by the Department of Health and Human Services, this informational hub that will allow people to go online to sign up for their benefits under the Affordable Care Act. The comments of this individual were quite revealing. Speaking to an AHIP group earlier this year, he said:

The time for debating about the size of the text on the screen or the color or whether it's a world-class user experience, that's what we used to talk about 2 years ago. Now let's just make sure it's not a Third World experience.

That's a pretty sobering admission from someone who is charged with providing the information hub, the information technology, the computer architecture that is supposed to be the underpinnings of the Affordable Care Act.

Bear in mind, it was 3 years ago, March of 2010, that the Affordable Care Act was signed into law. So 3 years later, billions of dollars spent in the implementation phase, and they're not sure if they can get this computer system up and running by October 1, which, by law, is when it is supposed to kick in.

That is a pretty significant admission from the information architect at the Department of Health and Human Services.

Now, when Barry Cohen, who is the head of the Center for Consumer Information and Insurance Oversight in the Department of Health and Human Services, was addressing the same group in response to a question, he was a little bit unclear as to whether or not they would be, in fact, ready on that October 1 deadline.

He said:

We'll have to wait. Then we'll be in a position to know which contingency plans we actually have to implement.

In other words, we can't plan for the contingency until we get there and see that a contingency plan is necessary. But, after all, what are contingency plans but those plans that are put in place because something unexpected may happen?

Last week, on the other side of the Capitol, in the other body, the Senator from West Virginia said:

ObamaCare is so complicated, and if it isn't done right the first time, it will just simply get worse.

That's a pretty startling pronouncement from someone who was, in fact, a pretty big cheerleader for the Affordable Care Act when it went through the Senate.

He went on to say:

I believe that the Affordable Care Act is probably the most complex piece of legislation ever passed by the United States Congress. Tax reform has obviously been huge, too, but up to this point, this--the Affordable Care Act--is just beyond comprehension.

Now, what does the Secretary of the Department of Health and Human Services have to say about all of this? She maintains that the Affordable Care Act will lower the cost of premiums for everyone; but in fact, in the past couple of weeks, she has admitted:

These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market.

Translation: you're going to be paying more.

She goes on to say:

Some men and some younger customers could see their rates increase. Women and older customers could see their rates drop.

So, Mr. Speaker, I would submit that the coming rate shock is something for which people are actually unprepared. They have been told for 3 years that, after all, this is the Affordable Care Act, and it's going to make health care more affordable for all Americans; but the reality is somewhat different from the truth that is espoused by the Department of Health and Human Services.

Let's think about some of these things for just a minute, because they are important. Remember when the Affordable Care Act was debated? Remember the President's discussing the Affordable Care Act? Everyone wanted to talk about patients with preexisting conditions: patients with preexisting conditions are frozen out of the system; patients with preexisting conditions can't get care. Well, they meant couldn't get insurance, because people can get care. Nevertheless, this was proposed as an enormous problem. The Affordable Care Act was going to fix it.

How did the Affordable Care Act fix it?

Next year, when the exchanges are up and running or when Medicaid is expanded, people, indeed, may be incorporated into that system. Until that day arrives, they were to be taken care of through what is known as the Preexisting Condition Insurance Program, or PCIP, which is the Federal preexisting risk pool that was set up for the first time under the Affordable Care Act. Five billion dollars was put forward to help people with preexisting conditions with their premiums. Now, there was a little bit of a barrier to entry. You had to be uninsured for 6 months' time before you would be eligible for coverage under the preexisting condition program.

I've got to tell you, Mr. Speaker, I thought the Supreme Court was going to knock this thing out of the water. I thought there was no way in the world the highest court of the land could look at this thing and agree that it is constitutional under the Commerce Clause; that is, you can compel commerce in order to regulate it. I just knew that that day when the Supreme Court ruled that they would agree with me. In fact, they did; but then they went on to say that, in fact, since it's all a tax, Congress has the power to tax, and for that reason, it's not unconstitutional, and the law was allowed to stand.

Leading up to that day that the Supreme Court made that pronouncement, I was so convinced that we as Members of Congress had an obligation to our constituents--to people who were, in fact, thinking that they were covered under the Affordable Care Act--to provide a contingency plan, particularly for those people who were covered under this new Federal preexisting condition insurance plan. Well, it turns out I wasn't right, and the law was constitutional.

But what would have happened last June 30 if the Supreme Court had said that it was unconstitutional, and the whole thing was struck down? As a consequence, people who were in the preexisting condition program would have found themselves without insurance, and that would have been a pretty significant event to have occurred. I felt that we needed to have a contingency plan to cover those individuals.

Now here we are some 6, 8 months later; and what happened in January of this year? The PCIP program ran out of money. It ran out of money at the end of January, and they said, We're not taking any more people into this program.

We had a hearing a couple of weeks ago in the Committee on Energy and Commerce and heard from a patient who had thought she was in the queue, in that waiting period, to get into the Federal preexisting condition program except that they suspended enrollment at the end of January. You've got to believe that there were a lot of people who were in that 6-month waiting period who were waiting for their time to come up so that they could, in fact, enroll in this preexisting condition program; but as of the end of January, they were shut out. So the committee wrote a letter to the President that said, We'd like to help you here. There are probably other moneys in the Affordable Care Act that can be moved around and can continue to cover these individuals until January 1 of 2014 when the exchanges and the Medicaid expansion and all of the goodies prescribed in the Affordable Care Act can come on line.

One of the things that we were told in leading up to the passage of the Affordable Care Act is that there were millions of people who fell into this preexisting condition trap. In fact, on the floor of the House, you heard people quote figures of 8 to 12 million people. The Speaker of the House at that time, Speaker Pelosi, said 125 million people had preexisting conditions. In fact, that was a little bit of a misnomer because, when you look at the people who are covered by insurance in this country, the vast majority is covered under what's called a ``large group plan,'' or what we know as ``employer-sponsored insurance.'' A preexisting condition exclusion can occur in that environment, but it's much, much rarer, and there are typically open enrollment periods in which a person can get taken on to his employer's insurance. Now, for 65 percent of the population, that's not the issue. Certainly, for people in the small group market and in the individual market, in the small group market and in the individual market, there was a problem.

On the numbers that people quoted prior to the passage of the Affordable Care Act--8 million, 10 million, 12 million people--how many people were in the Federal preexisting condition program at the end of June when I worried that the Supreme Court was going to strike the whole thing down?

There were 65,000 people and certainly every one of those individuals with a compelling story--and not a small population but a manageable population. If we are just talking about trying to correct a problem for 65,000 people in a country of 310 million, I would submit that we can do that without destroying the existing program, the employer-sponsored insurance, that people said they liked and wanted to keep.

Remember, if you like what you have, you can keep it?

Instead of taking care of a problem for a relatively finite but compelling population, the administration and, at the time, the congressional Democrats pushed through a bill of ``we just want to control everything about your health care.'' They got their wish, but now we had probably 100,000 people in January who were in the Federal preexisting condition program, and now no new people can sign up for it because it is going to run out of money.

Mr. Speaker, I would submit that there is other money available in things like, we call them, ``slush funds'' that were built into the Affordable Care Act; things like the Medicare Modernization Act; things like the fund that is to allow for other activities in the Centers for Medicare & Medicaid Services. So, by just shifting some money around, these people who have preexisting conditions, in fact, could be taken care of, and we have the ability to do that. Really, it would be a relatively easy lift at this point, and perhaps next week we'll see legislation on the floor.

Can you imagine if this had been a Republican President who had taken people off the Federal preexisting condition program? You would have heard about it from every newspaper in the country, and every television outlet in the country would have talked about it. How much did you hear? Well, you're probably hearing about it tonight for the first time. You'll hear about it a little bit more next week. People don't want to talk about the failures embedded in the Affordable Care Act, but it is important that we do so.

Now, when this bill was passed into law, March of 2010, the then-Speaker of the House, Speaker Pelosi, claimed that the Affordable Care Act would create 4 million jobs, 400,000 jobs almost immediately. Well, that hasn't turned out to be exactly true, either.

The Federal Reserve reported that employers are citing the uncertainty embedded in the Affordable Care Act as reasons for layoffs in companies and the reluctance to hire new employees.

The application that was proposed by the Department of Health and Human Services for people to fill out to get coverage in the exchanges next year actually asks an applicant if their job is no longer offering health coverage in the next year. Clearly embedded in the Affordable Care Act was a risk to job creation in this country, and we're now seeing that actually come into being.

The law does not treat everyone the same. It creates essentially a new underclass. It promises universal coverage, but it leaves some workers' families without coverage. Now, one of the most significant embedded problems in the Affordable Care Act is if an individual is working and their employer is providing them employer-sponsored insurance, that employer is required to do that; or if that employee looks for coverage in the exchange, that employer may be fined. But if the employer provides that employer-sponsored insurance, great. But he doesn't have to apply it, he doesn't have to provide that insurance to their family. This is a significant problem because that family, which right now may be covered, next year may not.

But here's the other part of that. That family would not be eligible for a subsidy in the insurance exchange because the employer is providing the benefit to the employee, but there was nothing in the law that said they had to continue family coverage. So who is going to be affected, primarily women and children. A headline in the Fort Worth Star Telegram a few weeks ago, and the Fort Worth Star Telegram is generally supportive of the administration and generally supportive of the Affordable Care Act, but under their headline was, ``500,000 Children to Lose Health Benefits Under the Affordable Care Act.''

This was actually not through something that was revealed in the Department of Health and Human Services, but rather a rule that was proposed by the Department of the Treasury and the Internal Revenue Service. It turns out that children who lose insurance because the primary employee will be covered but the family will not, those children who lose insurance will not be fined by the IRS for not complying with the insurance mandate; but that is scant consolation for the fact that now they have no insurance and they have no reasonable way of achieving that because, after all, the cost for insurance is going to significantly increase under the Affordable Care Act.

There is a 21-page application for Americans who feel that they should be covered under the Medicaid expansion. A 21-page application is pretty significant. It does ask some questions that you have to ask yourself, are they germane to someone who is applying for health insurance. But nevertheless, the application is out there. It's in the public domain, albeit it's a draft at this point. My hope is that the Department of Health and Human Services will refine that, but most of the 27- to 35-year-olds that I know are not going to spend a lot of time filling out a 21-page application.

We were told in the run-up to the passage of this law that it would, in fact, pay down the deficit. It was $142 billion over 10 years, but it was supposed to reduce the deficit. Does anybody really believe that anymore? Of course not. And now the further evaluation of the costs and the expansive costs that are going to occur under the Affordable Care Act, probably an additional $1.5 trillion, at a conservative estimate, as to what this will add to the deficit over the next 10 years, and this is just for the subsidies and the exchanges and for the Medicaid expansion alone.

Now, why does that matter? Mr. Speaker, it matters because in just a few short weeks, the statutory borrowing authority of the United States will be met or exceeded. And this Congress, this House, will once again be involved in another discussion about raising the debt limit. In July of 2011, we had this discussion. It was pretty acrimonious and attracted a lot of attention and a lot of publicity, none of it good. We're going to have that same fight occur again.

A lot of people are concerned about the sequester. They say, we wish the sequester had never happened. But remember, the sequester was what the President proposed in order to get the expansion of the debt limit to a point where he would not have to deal with it again until after election day 2012. So the President got his wish. He said the sequester was good; it will allow us to get past this point and to move on. But now people are dealing with the aftermath.

I would just ask you, what is the sequester going to

look like in the summer of 2013, because the debt limit will not be just expanded to cover the obligations. There is going to have to be some spending discipline that goes along with that. I don't know what that will be. I'm not privy to those discussions, but will all the money that is promised to be there for the Medicaid expansion, for the subsidies in the exchange, will it in fact be there, or will that be exposed to some type of sequester-type device? I don't know the answer to that question, but those are questions in which this House will have to deal in literally a few short weeks' time.

There has been significant tax policy that has gone into effect since the Affordable Care Act was passed. Just this year, five new taxes--significant taxes--have occurred, as a result of the Affordable Care Act. There's a payroll tax that has increased almost 1 percent, 0.9 percent.

A payroll tax for people who earn over $200,000 a year, joint filers of $250,000 a year, some people look at that and say we knew that Medicare was getting into trouble. Maybe that is a good thing that that payroll tax for Medicare has gone up. Well, it might be except the money doesn't stay in the Medicare trust fund. It's collected, and then it immediately goes into the general revenue in order to pay for or offset the cost of the subsidies that are going to exist in the insurance exchange.

One of the more onerous taxes that was begun on January 1 was a 2.4 percent gross receipts tax on medical devices. Class II and class III medical devices as defined by the Food and Drug Administration are now subject to a 2.4 percent gross receipts tax. That's not a tax on profits; that's a tax on gross sales. It is significant. Sure, there are some big companies that will make due; but really it's the small entrepreneur who is developing medical devices, and this is happening all the time. Those individuals are the ones who are going to be particularly hard hit. And, as you can imagine, it may reduce some of that entrepreneurial activity or send it overseas.

We already have a Food and Drug Administration that's sometimes difficult to deal with as far as getting things approved. Europe and Central Asia are not so difficult to deal with. And, hey, by the way, there's not that gross receipts tax. Perhaps we ought to move our manufacturing somewhere else. And, of course, the jobs go with the manufacturing.

There's been a change in what are called flexible spending accounts. Flexible spending accounts are that money which you are able to designate at the beginning of every calendar year, and you can have pretax dollars that can be spent for recurrent medical expenses.

This now has been capped at $2,500 a year. The amount was much higher previously; but under the Affordable Care Act, in order to offset some of the additional costs of the Affordable Care Act, they said we're going to cap those flexible spending account contributions to $2,500. That started this year.

So if you've got a recurring medical expense that occurs every year, and think about someone with a family member who has a chronic medical condition or a family with a special needs child where they wanted to be able to set some dollars aside at the beginning of the year, not have them taxed so that they could pay for whatever it was that was going to be required, they are now capped at $2,500. People are going to very quickly find that amount is exceeded, and that they have been caught in this so-called FSA trap, or flexible spending account trap.

For people who deduct medical expenses from their income tax, and as you know, currently for the last tax year for which we all just prepared our taxes and filed them this evening, there was a 7.5 percent exclusion from your adjusted gross income, that is, until your medical expenses equaled 7.5 percent of your adjusted gross income, you didn't get to deduct medical expenses from your tax. That amount has actually increased to 10 percent for next year. So people who were accustomed, people with a lot of medical expenses who were accustomed to keeping up with those receipts and then being able to deduct those medical expenses as they exceeded 7.5 percent of their adjusted gross income, they're now not going to be able to deduct those expenses until after 10 percent of their adjusted gross income.

So who have we punished here?

We have punished the families with special needs children. We have punished people with chronic medical conditions. We've basically gone after the sickest Americans to say you're going to pay a little bit more for what everyone else is going to receive in the Affordable Care Act.

There is going to be a tax on insurance companies--I'm sorry--a tax on insurance policies that people will have to pay. This will go into a couple of different accounts, a couple of different funds, but the bottom line is it costs more every year to buy your insurance.

And then, beginning in 2018, the so-called tax on Cadillac insurance plans kicks in. And who's this going to affect?

Well, yes, it will affect higher-income earners who get a generous insurance policy. But it also affects union members whose insurance policies were part of their collective bargaining agreements over time, and those policies which now are going to be judged to be Cadillac plans will actually be taxed at a much higher rate starting in 2018.

There was supposed to be an exchange set up for small business. It was called the SHOP Exchange, small business health policies. Twenty-nine times there were deadlines that were missed in setting up the SHOP exchanges. And now, just in the past couple of weeks, the Department of Health and Human Services said, it's pretty tough, pretty complicated. We don't know if we can do it or not, but we're giving ourselves another year. This won't happen until 2015.

I think this is one of the things that really caused some of the consternation over in the Senate because in the other body this was one of the deals that they made in order to get the Affordable Care Act passed, in order to get it to the floor of the Senate in the fall of 2009.

It is instructive for people to remember how this thing came to be in the first place. Now, in the summer of 2009, the committees of jurisdiction here in the House--Ways and Means, Energy and Commerce, Education and Labor--all debated a version of the House health care reform bill.

Now, make no mistake about it. I think it was a crummy bill. H.R. 3200 was the number. It did go through the committee process. It was amended several times in the various House committees. From there it went to the Speaker's desk, where it was all kind of consolidated; all three committee products were kind of melded into one, and then it came to the floor of the House, doubled in size, during that 2- or 3-month hiatus, and was passed by the House of Representatives in the fall, in November of 2009.

Not a single--well, one Republican vote, and the rest carried by Democrats. Thirty-five Democrats voted against it because of some of the problems contained within that legislation.

But the important thing is, as bad as I think it is, it did go through the regular House process. We may have been curtailed in the number of amendments we could offer in committee. Our time for debate in committee may have been limited but, nevertheless, it did come through the committee process.

Not so in the Senate. H.R. 3200 has never been seen or heard from again. It passed the House, went over to the Senate to await activity, and there it went, up into the ether somewhere. No one really knows what happened to it.

But, wait a minute. There's a health care law that was signed by the President in March of 2010. How did the health care law come into being?

Well, the House had passed another bill in July

of 2009. It was H.R. 3590, dealt with housing. I think it passed the House with very few negative votes. But it was a housing bill.

It went over to the Senate to await further activity, and that's the bill that was picked up by Senate leadership that was brought to the floor of the Senate and amended. The amendment read ``strike all after the enacting clause and insert,'' striking, of course, the language for the housing bill, which was the base bill, and inserting health care language, and that was the bill that the Senate passed late on Christmas Eve in 2009, right ahead of a big snowstorm that was coming to town.

All the Senators wanted to get out so they passed this bill. Sixty votes. Not a single Republican vote. Passed with entirely Democratic votes.

Now, under normal circumstances, H.R. 3590, which was now the Senate health care bill, and H.R. 3200, which was the House bill, would have gone to a conference committee. They would have worked rough edges out. They would have worked the differences out between the two bills, and a conference report would have come back to both Houses of Congress, the House and the Senate, and that would have been voted on, up or down.

The problem was that, remember, it took 60 votes to pass it on the Senate side. Shortly after H.R. 3590 passed on the Senate side, a Democratic seat was lost. Scott Brown was elected from Massachusetts and, as a consequence, that 60th vote was no longer available to the Democratic leadership in the Senate.

So what are they going to do?

Well, they said that the House will just simply have to pass H.R. 3590. After all, it was a House bill that was passed already by the House in July of 2009, amended by the Senate, to become a health care bill. All that is required for it to become law is for the House to take a vote; will the House now concur with the Senate amendment to H.R. 3590. So many as in favor, say aye.

If that is a simple majority, 218 votes here in the House of Representatives, if that is a simple majority, then that's the end of the discussion. The bill goes down the street to the White House for a signing ceremony, and that's exactly what happened.

Now, it took 3 months to accomplish that, because no one here in the House thought H.R. 3590 was a very good legislative product.

In fact, let's be honest, Mr. Speaker. It was a rough draft that had been produced by the Senate Finance Committee, the staff of the Senate Finance Committee, as a vehicle to get the Senate to conference with the House. They never expected for this thing to be signed into law. It was a vehicle to get to a conference to then sit down with the House, and let's work out these differences between the two of us, and then we'll get a conference committee product to come to the floor. But it didn't work out.

As a consequence, the bill that was signed into law was one that was never intended to become law. It was a product produced by the staff of the Senate Finance Committee as a vehicle to get them out of town before Christmas Eve so that they could then get to the conference committee where the real work, the real work of writing this health care law would occur.

The American people were cheated by this process, Mr. Speaker. And now, we're left to deal with the consequences.

And what are the consequences?

500,000 children, according to the Fort Worth Star-Telegram, being taken off their parents' employer-sponsored insurance. People in the preexisting program who had been waiting patiently for their turn are now told, we're sorry, it's full up. No more space. You can't come in.

It didn't have to be this way. There were good ideas on both sides that could have been taken into account.

One of the fundamental questions I think we have to ask ourselves over and over again is where were the country's Governors when this bill was actually written. Well, of course it was written by the Senate Finance Committee staff, so the Governors were nowhere in the room. A lot of deals that were struck between some of the special interest groups and the White House were all done down at the White House in July of 2009. The Nation's governors weren't involved in that.

Why were the Nation's governors so reluctant to accept the exchanges, the Medicaid expansion?

Well, the answer, Mr. Speaker, is because they were dealt out of the process. And then, the rulemaking that started happening after the law was signed began to scare them, but a lot of the rules were held until after Election Day.

The rule governing essential health benefits--what Governor in their right mind is going to sign on to an exchange program where they don't even know what they're going to be required to cover? They don't know how much money it is going to cost them?

Well, it's no surprise that 26 States said no dice to the exchange. An additional six States said maybe we'll do a partnership, but you go ahead and set the program up through the Federal level first.

And as consequence, the Office of Personnel Management is now required to set up exchanges for 26 States, plus six that might want partnership, and that's a tall order, which is why Gary Cohen said, I'm not sure we're going to need a contingency plan, but we can't know what contingency we have until we actually get there.

I will submit there is going to be a need for a contingency plan. The sooner that the agencies admit that to the appropriate committees in the House and Senate, the sooner they can begin to work on a solution for a problem.

Because, Mr. Speaker, let's face it. January 1 of 2014, there's going to be an emergency room, there's going to be an operating room, there's going to be a delivery room where a patient and doctor are going to come in contact with each other, and they don't need the uncertainty of what this legislation has dealt them.

I thank the Speaker for the time this evening, and I yield back the balance of my time.